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Verizon, Cox Launch Package Deals

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Verizon Communications Inc. (VZ - Analyst Report) has tied up with Cox Communications to offer bundled service packages consisting of video, phone and Internet in Phoenix and Las Vegas. Customers will now be able to access video, Internet and home phone services of Cox Communications and wireless services with smartphone and tablets from Verizon from either company through a bundled package. In addition, customers would be given a new $100 prepaid Visa debit card upon subscribing to the packaged services.

The two companies collaborated last year to mutually sell products and services in key markets like Nebraska, Northwest Arkansas, California, Kansas, the Oklahoma City and Tulsa. With regard to this arrangement, the companies launched their bundled services in Phoenix and Las Vegas early this year.

We believe that Verizon’s tie-ups with various media and cable companies like Cox Communications add to its brand value and increase market traction through diversified product portfolios. In addition, these alliances also enable the company to expand its market share in different service categories and enter new markets without seeking merger and acquisition strategies.

Apart from key alliances that boost the company’s growth, Verizon is also trying to enhance its existing network capabilities to offer uninterrupted wireless experience to its customers. In this context, the company is working on a spectrum acquisition that can support expansion plans in data services.

The company also has the approval from the Federal Communications Commission (FCC) to buy wireless spectrum from Spectrum Co., which is a joint venture between Comcast Corporation (CMCSA - Analyst Report), Time Warner Cable Inc. (TWC - Analyst Report) and Bright House Networks for $3.9 billion. To raise funds for this transaction, Verizon struck a deal with AT&T, Inc. (T - Analyst Report) to sell 39 lower 700 megahertz (MHz) licenses to the latter. In exchange, Verizon received $1.9 billion and Advanced Wireless Services (AWS) spectrum licenses in five markets.

Additionally, Verizon planned the sale of three separate 700MHz spectrum blocks to small rural telecommunication firms. We believe the sale of lower spectrum assets and the consequent purchase of new AWS spectrum will work in favor of Verizon. The AWS spectrum holdings will double Verizon’s capacity as well as enable services at a much higher speed and expedite the LTE rollout, thereby driving data revenues and boosting its competitive position.

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